Dive Brief:
- The national average rent fell $9 to $1,719 in November — the steepest one-month drop in over 10 years, according to Yardi Matrix’s latest Multifamily National Report — as the rent slowdown continues. At the same time, rent growth fell to 7.0% year-over-year — the lowest figure in 17 months.
- Yardi attributes the ongoing slowdown to a softening economy, slowing interest, record inflation and rising interest rates. It is not, however, a sudden or unexpected sign of a deep recession given runaway rent growth between January 2021 and October 2022, according to the report.
- Still, according to a survey from the National Association for Business Economics, a majority of economists believe there is more than a 50% chance of a recession of some kind in 2023.
Dive Insight:
While rent growth has fallen negative in many major markets over the past few months, growth remains positive YOY in every one of the top 30 metros in the Yardi Matrix data set.
Indianapolis remains the top metro for YOY rent growth at 11.4%, and is now the only major metro where YOY rent growth stands above 10%.
This metro remains one of the least expensive markets out of the top 30 — the average rent there rose $4 in November, up to only $1,224. Rent growth pulled ahead there as deceleration took hold in once high-growth markets like Miami, which stood at the top just a few months ago with rent growth of over 20% YOY.
| Market | YOY rent growth, November 2022 | YOY rent growth, October 2022 | Difference |
|---|---|---|---|
| Indianapolis | 11.4% | 11.8% | -0.4 |
| Miami metro | 9.7% | 11.4% | -1.7 |
| San Jose, California | 9.6% | 10.6% | -1 |
| Kansas City, Missouri | 9.2% | 9.8% | -0.6 |
| Orlando, Florida | 9.2% | 11.6% | -2.4 |
| Nashville, Tennessee | 8.7% | 9.7% | -1 |
| Dallas | 8.6% | 10.5% | -1.9 |
| Raleigh, North Carolina | 8.4% | 9.3% | -0.9 |
| Charlotte, North Carolina | 8.1% | 9.4% | -1.3 |
| New York | 7.5% | 9.0% | -1.5 |
SOURCE: Yardi Matrix
Rapidly dropping occupancy rates reflect an overall decline in multifamily demand in many markets, including Las Vegas, where occupancy has fallen 2.5%, and Tampa and Phoenix, both down 1.9%. Las Vegas and Phoenix also have the lowest YOY rent growth out of the top 30, at 2.0% and 2.5% respectively.
On a monthly basis, only two markets recorded any gain in asking rents — New York (0.4%) and Indianapolis (0.3%) — while Kansas City, Missouri, and Miami fell flat. Boston saw the sharpest drop at -1.3%, followed by Las Vegas at -1.2%.
Renewal rent growth remains strong in many places where asking rent growth has dropped after a period of runaway growth, such as Miami (20.5% YOY). Yardi expects renewal rents to follow asking rent patterns in their respective cities and drop off in the coming months. The national lease renewal rate stands at 63.8% in September, down from 68.2% in the fourth quarter of 2021.
